FocusS Asia acetic acid at six-month highs on supply shortage

23 April 2012 10:17[Source: ICIS news]

By Helen Lee

?xml:namespace>SINGAPORE (ICIS)--Spot acetic acid prices in south Asia hit a six-month high, with India-based end-users quoting high bids for May loading cargoes amid a tightening of supply, market sources said on Monday.

An offer May cargoes was quoted at $580/tonne (€44/tonne) CFR (cost and freight) India on Monday, about $50/tonne higher than last week’s bids of at least $530/tonne quoted by Indian buyers. An international trader said it rejected bids this week at $565/tonne CFR India.

Supply to India from key acetic acid producers had declined since March because of a heavy turnaround season at regional plants, as well as reduced output from southeast Asia-based and Middle East-based plants because of poor margins.

This propelled spot acetic acid prices to six-month-highs of around $530/tonne CFR India during the week ended 20 April, from four-month lows of around $465/tonne CFR India in late March, according to ICIS data.

A global producer was said to have shut its 500,000 tonne/year plant in southeast Asia since mid-March, according to market sources. The cause and duration of the shutdown could not be confirmed by the producer.

In Malaysia, BP Petronas Acetyls is scheduled to shut its 535,000 tonne/year plant at Kertih, Terengganu, in early May for a two-week turnaround. The plant is currently operating at a reduced output of around 60% of capacity, according to sources close to the company.

The shortage of acetic acid supply in India was felt more acutely in April, when Iranian cargoes could not be shipped in time owing to difficulties in securing suitable vessels amid Western sanctions.

Indian buyers hit by shipment delays were sent scrambling to secure spot lots from other non traditional supply sources, like Taiwan.

“The problem is that product is not available,” an end-user said, adding that no vessel is available from Iran for May shipments.

Other importers disagreed and pointed out that China’s Sinochem-owned vessels are able to ship cargoes from Iran.

“Vessels owned by Sinochem are now discharging at west coast India. Thereafter, they would be able to call at Iran ports,” an India-based trader said.

A Hebei-based producer added that it may have a 3,000 to 4,000-tonne cargo available for sale to traders at $460/tonne FOB (free on board) China, reflecting a $15/tonne increase from selling indications a week earlier.